Article 6 of the Paris Agreement

Context (TH): The Ministry of Environment, Forest and Climate Change (MoEFCC) notified the formation of a National Designated Authority (NDA) to kick-start carbon trading mechanisms in India—fulfilling the mandate of Article 6 of the Paris Agreement.

National Designated Authority

The National Designated Authority is a 21-member committee, which is chaired by the Environment Secretary, and includes representatives from key ministries:
- Ministry of External Affairs
- Ministry of New & Renewable Energy
- Ministry of Steel
- NITI Aayog
Functions:
- Identify and recommend activities eligible for trading in emission reduction units.
- Evaluate, approve, and authorise projects generating Emission Reduction Units (ERUs).
- Sanction the use of ERUs to fulfil India’s NDC commitments.
Establishment of the National Designated Authority is a mandatory requirement under Article 6 of the Paris Agreement.

Article 6 of the Paris Agreement aims to establish frameworks for international carbon markets to help countries meet their Nationally Determined Contributions (NDCs).
It comprises three interlinked components:
- Article 6.2: Provides accounting and reporting guidance for trading mitigation outcomes between countries (Internationally Transferred Mitigation Outcomes (ITMOs)).
- Article 6.4: Establishes a UNFCCC-supervised carbon crediting mechanism for high-integrity credits. It is similar to the Clean Development Mechanism of the Kyoto Protocol.
- Article 6.8: Enables non-market cooperative approaches to enhance climate action without credit trading.

Feature	Article 6.2	Article 6.4	Article 6.8
Purpose	Guidance on accounting/reporting for cross-border mitigation outcomes (ITMOs)	Establishes a UN-supervised carbon credit trading mechanism	Facilitates non-market cooperation mechanisms
Mechanism Type	Market-based, via bilateral/multilateral ITMO transfers	Centralized UNFCCC mechanism for carbon credit issuance	Non-market, voluntary cooperation (e.g., capacity-building, technology transfer)
Supervision	National-level with international accounting standards	UNFCCC mechanism with supervisory body	UNFCCC framework (e.g., NMA platform)

Transparency and Accountability: Countries must disclose approved mitigation outcomes, with public reporting of inconsistencies.
Financial Mobilisation: Drives investments for achieving New Climate Finance Goals (NCQG).
Global Market Integration: Encourages standardised rules for carbon trading under UN oversight.
Support for Developing Nations: Helps finance afforestation, clean energy and emission reduction projects in developing countries.

Double Counting: Countries are not mandated to disclose mechanisms to avoid duplicate reporting of carbon credits.
Risk Reversals: Inadequate monitoring for instances where stored carbon is released back into the atmosphere (e.g., forest fires).
Weak Accountability: Lack of strong consequences for misreporting or misuse of carbon credits.
Regulatory Concerns: Transition from Kyoto Protocol’s Clean Development Mechanism (CDM) to Article 6.4 lacks stringent additionality checks, risking the inclusion of low-quality projects.

Carbon Markets are mechanisms designed to reduce greenhouse gas emissions by allowing the trade of carbon credits.
They create financial incentives for entities to lower emissions or improve energy efficiency.

Earning Carbon Credits: Countries or industries can earn carbon credits by reducing their greenhouse gas emissions beyond their set targets.
Trading Carbon Credits: It can be sold to other entities that need them to meet their own emission reduction targets. The trade is usually conducted through a marketplace, where credits are sold to the highest bidder.

Carbon Credit represents one tonne of CO₂ reduced or avoided. These credits come from activities that either reduce emissions (e.g., efficient cookstoves) or remove CO₂ (e.g., tree planting).